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February, 2018

The True Cost of Time Theft

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The True Cost of Counterproductive Work Behavior: Time Theft

Have you ever had an employee clock in a few minutes early? Or maybe a few minutes late? Maybe they took a long lunch break and didn’t account for the extra time they weren’t in the office. Seems innocent enough, but the truth is, this counterproductive work behavior (CWB) is costing your company more than you think. In fact, time theft is one of the most widespread and preventable issues unreasonably costing companies across the country. Not only is it economically costly for organizations, but can affect the morale, productivity, and attitudes of employees as well. So before you let those minor time discrepancies slide, take a moment to consider the true cost of time theft.

What is CWB?

We all try to encourage positive, forward-thinking work, but what happens when employees’ goals and motivations don’t align with your organization’s? This is when counterproductive work behavior becomes an issue. CWB is any behavior that undermines the goals and interests of a business. It can present itself as an issue in a variety of forms including aggression, fraud, and harassment. However, we are going to focus on the alarming effects and costly statistics of employee time theft.

The Problem With Time Theft

As we mentioned, time theft has negative impacts on both your organization and on your employees. So it’s important to recognize the serious implications of time theft and implement actionable plans to prevent and avoid future violations.

So why is time theft so common if we know this counterproductive work behavior is so costly? Because employees can easily take advantage of inaccurate time tracking systems, making it difficult to properly track legitimate time entries. Manipulating paper timesheets and having other employees clock in on their behalf (also known as buddy punching), for example, are ways that employees can exploit the mismanagement of time and attendance. Additionally, if HR managers or supervisors were to try personally monitoring employee time and attendance more closely, it would mean spending their time inefficiently. Co-managing and “babysitting” employees clocking in and out is a task no HR manager wants nor has time to undertake.

How Time Theft Affects You

Time theft, or employees being paid for time they have not actually worked, affects almost 75% of U.S. businesses, according to a study conducted by the American Payroll Association (APA). Stealing company time may seem like a mild transgression, but this can cost companies up to seven percent of their gross annual payroll.

Time Theft Example

Imagine This

Imagine this in dollar terms: for every $1,000,000 in payroll wages paid, $70,000 is paid for hours that employees didn’t actually work. That’s an alarming amount of money that your company could be saving or putting towards other more productive efforts.
In the same study, 43% of those surveyed indicated they have exaggerated the number of hours they’ve worked or underestimated their breaks taken at least once, proving the prevalence of informal time and attendance inefficiencies. And to make matters worse, almost 40% of those respondents are stealing 20 or more minutes. Add that up over the course of a week, and your employees could be getting paid for days worth of unworked time.

Let's Take a Look at the data of time theft

prevalence-ee-time-theft
Methods Used to Commit Time Theft
amount-time-theft

How Time Theft Affects Your Employees

In addition to being costly, time theft can further impact your company by diminishing employee productivity and morale.

This negative behavior impacts the quality of work produced by the employee engaging in time theft, but can also negatively affect the productivity of other employees in the company as well. If others see their efforts, work, and timeliness is not recognized and there is no consequence for time theft, some employees might be tempted to see how far they can push their boundaries as well.  When this counterproductive work behavior is perceived as acceptable behavior, it will spread like wildfire. Because what’s a few minutes here and there, right?

Likewise, creating a company culture in which time theft is common and lacks clear expectations can be extremely frustrating and demoralizing for employees. Seeing time theft go unnoticed by management can cause employees to feel distrust and dissatisfaction with their superiors and company.

Eliminating Time Theft

Organizations should take the time to evaluate their current time tracking procedures to identify leaks in their systems. Auditing their time and attendance systems and implementing an electronic or online solution can save HR managers time, companies money, and improve the bottom line. Eliminating the possibility of inaccurate time tracking and time theft with a cloud-based time tracking solution that syncs attendance data with payroll data will increase accountability for hours worked and ensure accurate pay.

Desktop or Kiosk Time Capture

Desktop or Kiosk Time Capture

Employees can clock in by logging into their work desktop or an assigned company kiosk with personal identification numbers. The time of login is recorded automatically for a specified pay period.

Mobile Time Capture

Mobile Time Capture

Mobile time capture using GPS tracking can be a better solution for those organizations in and out-of-office setting. Rather than using a kiosk that must be on-site, companies can permit employees to clock in using their mobile devices through a mobile app once they are within a designated area.
Biometric Verification

Biometric Verification

The most secure way to eliminate buddy punching is by requiring employees to clock in using biometric verification. This solution requires unique identifiers like fingerprints, hand geometry, or facial recognition.
Clock Rules

Clock Rules

Rounding rules and attendance options decided upon by HR administrators allow for more control and visibility of the time recorded within the system. This company-level setting will round employee punches up or down to the nearest interval, reducing the “theft” of unworked time. Additionally, automatic deductions for lunches or scheduled breaks will be subtracted from an employee’s hours based on the number of hours they’ve worked in shift or day.
Implementing these tools to combat time theft are more effective and quantifiable solutions to managing time theft, but managers and supervisors should also more clearly communicate with their employees. Setting clear expectations and communicating time requirements to new, or even seasoned, employees will remove misconceptions about working hours. These efforts coupled with better time and attendance systems will help eliminate time theft altogether, improving the bottom line and company culture.

How APS can help

APS helps organizations of all sizes and industries with their payroll processing and tax compliance needs. With a unified platform and a team of tax compliance experts in your corner, we can help make payroll and tax errors a thing of the past.

Looking to make a mid-year switch to a new payroll provider? It’s easier than you think and APS can help you along every step of the way to ensure a successful transition. For the past four years, we have ranked as a High Performer, Best Customer Support, Ease of Use, Functionality, and Product Quality by G2 Crowd. We have also been ranked the #1 software company in Louisiana, a testament to the confidence our clients have in our work.

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